Firm News 1/10/2007

Policy Reformation.  First Department reverses trial court’s denial of insurer’s motion to dismiss insured’s claim for policy reformation where complaint fails to allege facts of either a mutual mistake or a fraudulent unilateral mistake.  Policy at issue indisputably did not cover the premises underlying the claim.  Greater New York Mut. Ins. Co. v. United States Underwriters Ins. Co., 2007 WL 45852 (1st Dept. January 9, 2006).

Material Misrepresentation/Rescission.  Second Department affirms denial of insurer’s summary judgment motion on claim seeking rescission of a liability policy.  Court finds insured raised questions of fact regarding whether there was a misrepresentation, and, if so, whether it was material.  Tyras v. Mount Vernon Fire Ins. Co., 2007 WL 57788 (2d Dept. January 9, 2007).

First-Party Property/Faulty Workmanship Exclusion/Rainfall Limitation.  In case where insured made claims for damages to his building arising from faulty exterior wall work, court grants insurer summary judgment with respect to damages caused by contractor’s improper cleaning techniques.  Court finds that term “faulty workmanship” in an exclusion in the all risk policy is not ambiguous, and refers equally to faulty workmanship as a process and as a result.  Court, however, finds that rainfall limitation in policy does not apply to damage caused by rainwater that collected and spilled from improperly erected tarps because “dominant and efficient” cause of the damage was the tarps, not the rain.   Court finds issue of fact as to whether faulty workmanship exclusion applies to the same damage in absence of evidence that failure to maintain scaffolding supporting the tarps constituted faulty workmanship.  Wider v. Heritage Maintenance, Inc., 2007 WL 38670 (Sup. Ct. New York Co. January 3, 2007).

First-Party Property/Contamination Exclusion.  DECISION OF INTEREST.  Second Circuit Court of Appeals vacates summary judgment in favor of insured in case involving claim under an all risk policy for damages to a building and its systems caused by particulate matter from the nearby World Trade Center attack.  Court finds the undefined term “contamination” ambiguous, and concludes that the finder of fact must consider extrinsic evidence, if any, of whether policy was intended to exclude damage caused by the building’s exposure to the particulate matter.  Court, however, affirms district court’s conclusion that the efficient cause of the damage was the contact of the particulate matter with the building, not the collapse of the World Trade Center.  Therefore, if the damage constitutes “contamination,” as determined by the finder of fact, it would be excluded.  Parks Real Estate Purchasing Group v. St. Paul Fire and Marine Ins. Co., 2006 WL 3848718 (2d Cir. December 21, 2006).

Claims-Made Professional Liability/Proof of Mailing.  Summary judgment granted in favor of insured in claim for coverage under a claims-made professional liability policy where insured conceded claim was not reported in the coverage period as required.  Insured instead argued that policy period was extended due to insurer’s alleged failure to issue notice regarding termination of coverage and options regarding purchase of additional coverage.  However, insurer submitted affidavit of employee with personal knowledge that office mailing procedures were followed, along with a copy of the notice sent by certified mail with a return receipt signed by the insured.  In absence of claim or evidence that the signature was not the insured’s, court finds binding presumption of mailing.  Kleyman v. Continental Cas. Co., 2007 WL 29388 (E.D.N.Y. January 4, 2007).

First-Party No-Fault.  Court denies provider’s motion for summary judgment where affidavit of provider’s corporate officer was insufficient to establish personal knowledge of office practice and procedures to lay a foundation for admission of documents attached to provider’s motion papers under the business records exception to the hearsay rule.  Mega Supply & Billing, Inc. v. Progressive Cas. Ins. Co., 2007 WL 29064 (Sup. Ct. App. Term January 3, 2007); Fair Price Medical Supply Corp. v. GEICO Ins. Co., 2007 WL 29052 (Sup. Ct. App. Term January 2, 2007); Fair Price Medical Supply Corp. v. GEICO Ins. Co., 2007 WL 29058 (Sup. Ct. App. Term January 2, 2007).

First-Party No-Fault.  Court finds provider’s failure to provide assignor’s social secutiry number constituted basis for insurer to take no action on claims, and suit was therefore premature.  With respect to other claims, court finds insurer’s denial form premised on lack of medical necessity was insufficiently specific and did not timely attach the IME report, and grants provider summary judgment.  Olympic Chiropractic, P.C. v. American Transit Ins. Co., 2007 WL 29051 (Sup. Ct. App. Term January 2, 2007).

First-Party No-Fault.  Court finds that since insurer established by competent evidence that it timely mailed its verification form and denial of claim form based on lack of medical necessity, the defense was not precluded.  Court finds an issue of fact regarding medical necessity.  Mid Atlantic Medical P.C. v. GEICO General Ins. Co., 2007 WL 29054 (Sup. Ct. App. Term January 2, 2007).

First-Party No-Fault.  Court finds summary judgment motion by billing provider properly denied where billing provider’s own claim form reflected that the treating professionals were independent contractors.  Billing provider was therefore not a “provider” under the regulations and not entitled to recover direct payment of no-fault benefits.  V.S. Medical Services, P.C. v. Allstate Ins. Co., 2007 WL 29056 (Sup. Ct. App. Term January 2, 2007).

First-Party No-Fault.  Court finds provider’s motion for summary judgment was properly denied where provider’s corporate officer affidavit was insufficient to prove mailing of claim, and insurer’s letter did not cure the defect since the letter did not set forth the amount of the claim.  Boai Zhong Acupuncture Services, P.C. v. Travelers Ins. Co., 2006 WL 3859081 (Sup. Ct. App. Term December 28, 2006).

First-Party No-Fault.  Court affirms summary judgment in favor of insurer where provider’s corporate officer affidavit failed to establish the claim was mailed under the certified mail receipt number, and where provider did not produce evidence to rebut insurer’s affidavit and printout showing it never received the claim.  Vista Surgical Supplies Inc. v. Allstate Ins. Co., 2006 WL 3859089 (Sup. Ct. App. Term December 28, 2006).

First-Party No-Fault.  Court reverses summary judgment in favor of provider where provider’s corporate affidavit was conclusory and did not establish office mailing procedures or personal knowledge of mailing.  Insurer’s denial forms did not cure lack of proof of mailing since the denials contained discrepancies with the claim forms.  Magnezit Medical Care, P.C. v. New York Central Mut. Fire Ins. Co., 2006 WL 3859079 (Sup. Ct. App. Term December 27, 2006).

First-Party No-Fault.  After trial, court awards provider judgment on its claim.  Court finds that employee of provider’s billing records firm could lay proper foundation for proof of mailing.  In contrast, insurer’s witness did not have actual knowledge of mailing of verification or sufficient knowledge of mailing procedures.  Nor did insurer’s witness’s testimony prove a peer review report was mailed with otherwise insufficient denial for lack of medical necessity.  Andrew Carothers, M.D., P.C. v. Progressive Ins. Co., 2006 WL 3843584 (N.Y. City Civ. Ct. December 21, 2006).

First-Party No-Fault.  Court denies provider’s motion for summary judgment where motion was supported by an attorneys affidavit lacking personal knowledge or foundation for admission of business records.  Insurer’s denial letter did not cure defects in provider’s proof since denial established mere receipt of a claim form, and did not concede the admissibility of the claim form or the facts set forth therein.  North Acupuncture, P.C. v. State Farm Ins. Co., 2006 WL 3873260 (Sup. Ct. App. Term December 18, 2006).

First-Party No-Fault.  Court awards summary judgment to provider where, although insurer timely mailed denials based on lack of medical necessity and included peer review reports, a rubber stamp by the reviewing doctor did not constitute a sufficient affirmation to make the reports admissible.  Vista Surgical Supplies, Inc. v. Travelers Ins. Co., 2006 WL 3858395 (Sup. Ct. App. Term December 15, 2006).

First-Party No-Fault.  In an action by provider, cross-motions for summary judgment denied.  Provider failed to prove mailing of claim, which failure was not cured by insurer’s denial that did not set forth amount of the claim.  However, defendant failed to prove timely denial where its affidavit did not contain personal knowledge that notice was mailed or sufficiently detailed description of office procedure to raise presumption of mailing.  Mega Supply & Billing, Inc. v. New York Central Mut. Fire Ins. Co., 2006 WL 3858392 (Sup. Ct. App. Term December 15, 2006).

First-Party No-Fault.  Court awards summary judgment to provider where denials for lack of medical necessity did not attach peer review reports, and instead only stated reports would be furnished upon demand.  Denial form alone was insufficiently detailed, and insurer produced no evidence reports were subsequently furnished.  Starret Medical L.C.P.C. v. GEICO Cas. Ins. Co., 2006 WL 3849086 (Sup. Ct. App. Term December 13, 2006).